Keep an eye on Burlington Northern Sante Fe (BNI)

Warren Buffet reportedly has a 15% stake in BNI as of last week.  This week’s Barron’s mentioned it and I saw it again on Forbes.  BNI opened at its 20 day moving average and moved up from there, although still down for the day.  The 50 day moving average acted as a ceiling earlier.  I’m debating selling a naked put at the October 80 strike.  With Buffet behind it I don’t think it will fall too much before he decides to buy the whole thing at the reduced price.  With today being such a down day after the worse than expected employment report, I’m going to give it another day before making a move.

Taking the “Buffet factor” out of the equation and the chart looks like it is in a trading channel that is pointing slightly down.  To top that off for another negative, the current price is at the high end of the channel.  BNI could move down towards 76 before turning around.  Throw the “Buffet factor” back in and a 75 stike put for $2 could be a good price, just as a riskier $4 put at 80 could be good.  It’s just not there yet, but keep watching.  I’m adding a trade trigger to email me if/when BNI drops below 80 and another for if/when it gets above 83.50.  It is trading for 81.19, just before 2pm today.

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